Jet Airways (India) Ltd shares witnessed a free-fall on Tuesday, sliding as much as 54% in intraday trade, on news that the State Bank of India (SBI)-led consortium of lenders has initiated the bankruptcy proceedings against the airline by filing an insolvency petition at the National Company Law Tribunal (NCLT).
The Jet Airways stock hit a low of Rs 31.65 on Tuesday. At 2.20pm, the share price was trading down 42% at Rs 39.60. The stock has lost over 90% of its value in the last one year. In January 2018, the market capitalization of Jet Airways stood at nearly Rs 10,000 crore, which has now has come down to Rs 400 crore.
The stock price reaction came after a CNBC TV18 report said SBI-led consortium has filed an insolvency petition against Jet Airways at NCLT’s Mumbai bench. SBI has also reportedly selected Ashish Chhawchharia of advisory firm Grant Thornton for the crucial role of interim resolution professional for Jet Airways.
SBI, in a statement released on Monday, said, “After due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received.” The statement further added that the move was necessitated as the prospective investor wanted some Sebi exemptions for a possible deal which can be worked out better under the bankruptcy laws.
Jet Airways’ lenders were trying to avoid the insolvency court to recover maximum dues. With the airline now going to NCLT, the banks will be staring at a huge haircut on their dues.
Meanwhile, NCLT is scheduled to hear insolvency petitions filed by two operational creditors of Jet Airways, Shaman Wheels Pvt Ltd and Gaggar Enterprises Pvt Ltd, on 20 June.
Jet Airways, once India’s largest private sector airline, was launched over 25 years ago by Naresh Goyal. The airline stopped flying on 17 April this year, after it ran out of cash and the unpaid lessors took away most of its 100-odd operational airplanes.
Jet Airways reportedly has an accumulated debt of Rs 8,500 crore and total liabilities of over Rs 25,000 crore.